Online Training Concepts

Module Two: 7 Steps To Becoming Financially Capable

The following 7 Steps can change your financial life for the best and create great habits for future savings and success!!

Step 1. Face Your Money. Open and read your mail; have organization & bill-paying systems; have a weekly money date.

It’s important to have a bill pay system that works best for you and your organization style. Incorporate a weekly money date into your financial life that allows you to both look back at the past 7 days of expenses, as well as look ahead into the next week so you are prepared for any additional up and coming expenses.

Step 2. Know Your Financial Situation. List all monthly income received, expenses, and debt payments. Then add it up - compare income to expenses and find out if your income supports your expenses.

Knowing your financial situation requires three pieces of information: income, expenses, and debt payments. It can be hard for us to write this down because of the fear of what we will see. By writing it down and facing the fear, this knowledge GIVES US A CHOICE, instead of living in denial.

Step 3. Distinguish Between Wants and Needs. Take care of your basic needs first (housing, food, transportation, and medicine) and make a plan to ensure these get paid.  After taking care of your needs, make choices about how you want to spend your money before you actually spend it.

The true issue here is not about wants vs. needs, it’s really about WANTS vs. WHAT WE WANT MORE. Are you willing to sacrifice a simple daily comfort for a larger and more important financial goal? Create physical reminders around your home and work place that act as reminders for you and your financial goals.

Step 4. Track Your Daily Spending. Be aware of where your money goes. Use fritter-finders, a spending diary, envelope system, check/debit register, or an app to learn more about your money behaviors. Then make changes to stay on track.

Tracking your spending is all about AWARENESS. When you form an awareness of your spending patterns, then you begin to have a spending plan that actually works. Do you best to begin tracking one or two of your biggest ‘hidden’ expenses (example: eating out) and see what using the Fritter Finder tracking shows you after one week. Use your Fritter Finder during your weekly money date and see what it teaches you about your spending habits.

Step 5. Develop a REALISTIC Budget. Follow your budget as closely as possible and evaluate how you are doing regularly. Are actual expenses still matching your budget? If not, adjust your budget so you stay in balance with your money.

It’s important that you create a REALISTIC budget that fits your financial life. Having a budget that takes care of both your wants and your needs, and allows you to save regularly, is something that is sustainable and enduring. The key is to make the plan and then allow for making adjustments along the way as income and expenses shift.

Step 6. Pay Bills on Time When Possible. Late payments are expensive and can hurt your credit. If you are unable to pay as agreed, call your creditors and explain the situation. 

The best thing you can do to keep your credit in good standing is to make sure you are paying your bills on time as agreed. This can save you money on additional late fees and interest charged.

Step 7. SAVE! How would your life be different if you had $1,000 tucked away for emergencies? Start the habit of saving a realistic amount regularly (each paycheck or monthly) until you have a $1,000 emergency fund.  After achieving that goal, keep saving regularly.  Always define your savings goal – both amount and purpose.

The biggest key to saving money is to create a CONSISTENT HABIT of transferring a small amount of your income into a separate account away from your primary checking account. START SMALL and build from there. Creating a successful savings habit will be a financial muscle that will gain you dividends as you move along your financial path.

Just a reminder, when you complete this online course and submit your survey, you will be eligible for a free 1 year subscription to YNAB, an online budgeting software application that can help you to stay on track with your money.

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